May 19, 2005—Network infrastructure services giant VeriSign yesterday announced that it will buy San Francisco-based RFID consulting services firm R4 Global Solutions for $15 million in cash. R4 will be rolled into VeriSign's Intelligent Supply Chain Services. In addition to 26 employees spread across its offices in San Francisco, Dallas, Boston, and Atlanta, R4 brings client relationships with Levi Strauss, McKesson, and Land O'Lakes, all major companies involved in RFID deployments. Mark McLaughlin, senior vice president and general manager of VeriSign’s Naming and Directory Services, said, "Adding solution consulting capabilities to VeriSign’s Intelligent Supply Chain Services will enable us to work closely with leading companies to deliver the greatest benefit from the coordination and sharing of data."

VeriSign, who in January of last year was tapped to run the EPCglobal Network Object Naming System (ONS), has been steadily increasing its visibility in the RFID space. Last month, it launched the EPC Application Developers Contest to kick-start application development around the EPCglobal Network, offering a $10,000 cash prize and access to prestigious venture capitalists.

The acquisition also bears out a prediction made last month by ABI Research that young, small pure-play RFID companies will become acquisition targets of large technology vendors interested in bolstering their RFID offerings. ABI's Erik Michielsen said, "Small companies can bring great value to the table. They are in a great position to complement their larger partners' skill-sets in broader areas... They really understand RFID at the network edge." The VeriSign-R4 pairing is a perfect example.

Also, because of the RFID industry's relative immaturity, small companies are providing RFID services to enormous global companies; this size mismatch is a phenomenon that does not typically happen in technology. Now that VeriSign, itself a $1.9 billion dollar company, can offer RFID expertise and services on par with the smaller providers, it will become a very attractive partner to those same global companies that would probably be more comfortable working with a company of its size.

Finally, R4 Global Solutions' 26 employees represent tremendous value in a climate of increasingly tight supply for RFID talent. By augmenting its RFID services by 26 employees, VeriSign is sparing itself the time and expense of competing for talent in the disadvantageous RFID labor market.

All things considered, the acquisition is a smart move for VeriSign, and it reaffirms the company's commitment to fostering activity on the EPCglobal Network.